Jobs Up But Work Week Down?

“We really don’t have a good explanation for it,” Bureau of Labor Statistics (BLS) commissioner Kathleen Utgoff told Reuters, explaining the incongruity between288,000 workers added to non-farm payrolls and a drop of the averageweekly hours worked in manufacturing dropping to 40.6 in April from 40.9 in March (See  U.S. Employment Engine Revs Up Even More in April ).   In addition, the BLS found factory overtime fell to 4.5 hours a week from 4.6 hours.

Across the private sector, the work week declined to 33.7 hours in March and April, down slightly from 33.8 hours in February.  

This strikes economists as odd due to the direct relationship normally shared between the average weekly hours worked and jobs.   Normally, employers boost the hours put in by existing workers before they hire – hoping that extra overtime or a longer work week will stave off the expense of new hiring until the economy is clearly strong enough to support it.

In fact, analysts polled by Reuters forecast the workweek would lengthen to 33.8 hours in April in a sign more hiring lies ahead.   “The relatively short work week does raise a caution flag about the sustainability of the recent surge in new jobs,” said Insight Economic economist Steven Wood.

However, Wells Fargo chief economist Sung Won Sohn does not see the reverse movement of the two indicators as a problem.   Sohn told Reuters the short work week and drop in manufacturing overtime may show employers are so confident in the economy’s strength they are skipping the step of increasing overtime and working hours and going straight to new hiring to meet rising demand.